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SK NETWORKS BROCHURE 2014 We create a future for our customer's happiness
SK NETWORKS BROchuRE 2014
We create a future for our customer's happiness
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CONTENTS
Business Overview
Trading
Information & Communication Technology Marketing
Energy & Car
Lifestyle
Subsidiaries
China Business
Management Support Divisional Group
Social Responsibilities
Fair Trade
2013 Financial Highlights
2013 Financial Statements
Subsidiaries / Affiliates
Global Network
Corporate History
Prologue
Trading
Information & Communication Technology Marketing / Energy & Car
Lifestyle
CEO’s Message
Board of Directors
SKNetworksis:
Aglobaltradingcompany
- Exported US$ 1.8 billion worth of goods in 2013
- Operating 63 offices and subsidiaries all around the globe.
- Secured 194 million tons of coal by investing in 8 mining projects.
AnICTdevicedistributor- Sold 8.5 million handsets in 2013 through 7 hub logistics facilities across Korea.
Apetroleumsupplier- Sold 43 million barrels of petroleum in 2013.
- Supplied an average of 0.9 barrels to everyone in Korea.
Anautoserviceprovider- Provided 1.5 million Happy Auto Membership customers with auto maintenance, rental, and sales services.
- Offers membership services to one out of twelve cars in Korea.
Afashionleader
- Over KRW 500 billion of annual clothing sales. - One of the top ten garment sellers in Korea.
Leadinghospitalityindustry- Operated Sheraton Grande Walkerhill Hotel, the major five-star hotel in Seoul, over half a century
- Unyieldingly maintaining W Seoul-Walkerhill as the best luxury hotel and ranked first in the hotel category of the Korea Pride Index for three consecutive years.
Value
happiness
Pride
Professional
customer-focused
CloserandCloser!SK Networks is bringing the world together under a common theme.
No matter what country you live in or what language you speak, you can find a happier lifestyle when you join together with us.
SKnetworks
today tomorrow
WearesailingoutintothevastoceanonabiggerboatChemicals _ Trading a wide range of chemical products, including solvents, fertilizers, and raw materials for chemical fiber Steel _ Trading steel products in North America, Europe, the Middle East, Asia and Australia. Resources _ Developing and distributing natural resources, mainly coal, around the world.
TradingTrading
today tomorrow
TradingInformation&CommunicationTechnologyMarketing/Energy&Car
today tomorrow
Ourformulaforvaluecreationissimple-thebestqualityproductsandservices.Information & Communication Technology Marketing _ Provides mobile devices and internet content, and corporate network services. Energy _ Distributes auto fuel and other sources of energy Auto _ Offers car rental, repair and maintenance services, as well as providing both online and offline emergency road services.
TradingLifestyle
today tomorrowOurcustomer-centeredserviceisthefirstpriority.Fashion _ Sells our own fashion brands and distributes the products of global brands. Hotel _ Two luxury hotels, Sheraton Grande Walkerhill & W Seoul-Walkerhill, offer a superior quality of service. Duty-free Shop _ Walkerhill Duty-free Shop offers a prestigious shopping experience and a premium quality of service. Leisure _ Jeju SK Pinx resort, selected as one of the world’s 100 best golf courses, and other leisure related industries offer an outstanding leisure experience.
CEO’s Message
CEO
’S MESSAG
E
1312
2013 was characterized by an on-going slow-down in the global economy. This led to an unfavorable business environment at home and abroad. SK Networks focused on strengthening its competitive edge by restructuring its business lines, reducing costs, and increasing profitability. We also improved our financial structure by selling under-performing assets, which resulted in considerable financial losses. On the upside, however, we earned positive reviews from the market by improving our company structure. Thanks to these various efforts, our op-erating profits reached KRW 241 billion in 2013.
The difficult business environment is expected to continue into 2014. SK Networks will, however, continue to seek steady growth. In 2014, we will focus on implementing the following: Firstly, we will further stabilize our main business lines. Based on our existing market leadership, we will continue to create new business models in the ICT Marketing and energy marketing sectors. In the trading sector, we will concentrate on coal resource development and trad-ing, and strengthen our steel and chemicals trading through comprehensive risk management. Secondly, we will promote new drivers of company growth. Our auto business sector will focus on car rental, repair and maintenance. We will diversify our fashion brands with the aim of becoming a global fashion leader. We will also make our hotel and leisure sectors into drivers for growth through efficient investment and restructuring. Thirdly, we will nurture high-caliber talent and build a fully transparent management culture.We will continue with our efforts to promote open communications and a bottom-up corporate culture, so that every company member can share their ideas and opinions to help the company through potential business crises and make it better in every possible way.
In 2013, we improved our business structure, and laid the foundations for a renewal of our company’s success. In 2014, we will strive to increase value for both shareholders and customers. We will also continue to strength-en business ethics across the company by enforcing fair trade and promoting win-win relationships across all of our activities. We would like to thank SK Networks’ shareholders, customers, suppliers, and partners, as well as our neighbors in the communities, for their continued support.
Thank you
Dear Shareholders And Customers,
Moon Duk-kyuPresident & CEO
SK Networks aims to increase its value and maximize shareholder benefit by implementing
accurate and progressive decision-making by the Board of Directors. We have therefore es-
tablished a Secretariat to assist the Board in its operations, and have increased the proportion
of outside directors. We also appointed outside directors to head each committee within the
Board, to ensure the independent and transparent operation of those committees.
CorporateTransparency
Board of Directors
Outside Director / Professor at Korea University Law School
Yoon Nam-Geun Kim Sung-Min Hur Yong-SukOutside Director / Professor at Graduate School of Finance in Korea Advanced Institute of Science and Technology
Outside Director / President of Samil Research Institute
Corporate GovernanceWe have already established an advanced corporate governance structure through the Board of Directors. We also set up sub-committees within the Board to ensure a system of robust checks and balance for top management.
Independent AuditOur Audit Committee is an important part of the system of checks and balance between the Board and top manage-ment. It is resolutely independent, as it consists of outside directors only.
Transparent AccountingOur accounting system abides strictly by national and international regulations. We have also introduced a system that certifies the accounting by our top management, so that financial institutions and shareholders are certain of its reliability.
Ethical Management We practice ethical management based on a Code of Conduct. We always aim to maximize the common interests of stakeholders and our communities by fulfilling our responsibilities.
Our greatest asset is the faith that shareholders and customers have in our company.
Song Hah-ZoongOutside Director / Professor at College of Politics and Economics in Public Administration Kyunghee University
1514
Moon Duk-Kyu Moon Jong-Hoon Park Sung-HaPresident and CEO Inside Director /
President, Office of SUPEX CouncilInside Director / Vice President, Portfolio Management Team of SK Holdings
BO
ARD
OF D
IREC
TOR
S
Inside Director Outside Director
SK NETWORKS ANNUAL REPORT 2013
012
BUSINESSOvErvIEW
1716
Energy&CarEnergy Marketing / Speedmate
LifestyleFashion / Hotel / Duty-free Shop
Subsidiaries
ChinaBusiness Car Rental / Real Estate Development / Logistics / Chemicals . Steel / Fashion
SK NETWORKS
Information&CommunicationTechnologyMarketingWholesale
TradingChemicals / Steel / Natural Resources
BU
SINESS O
vERvIEW
SK Networks Service / Speed Motors / SK Pinx
SK Networks specializes in the global trading with a
focus on industrial commodities such as chemicals,
steel and coal. Operating out of the vast network of
global outposts around the world, our professionals
lead the world market in the respective business
fields. In addition to reinforcing our market pres-
ence, we satisfy the constantly changes needs of
our customers by investing in the industrial value
chain.
Going forward, we will continue to reinforce our
business model by innovating trading systems,
investing in potential assets and maximizing syn-
ergies between our trading and investments. Our
ultimate goal is to become a leading global trading
company.
Evolving into a Leading Global Trading company
Trading
1918
1.8Billion uS Dollars
1.9
Export volume in 2013
Annual coal production
Million Tons / Year
Export volume in 2013 : US$ 1.8 billion /Annual production volume 1.9 million tons of coal
7.0
TRAD
ING
Sales in 2013 (in trillions of KRW)
SK Networks chemical business focus on local and global trading of chemical products. Our product lines include aromatics such as styrene monomer, benzene, xylene, and toluene; chemical fiber materials such as monoethylene glycol and purified terephthalic acid; methanol and solvents; fertilizers such as urea; and polyurethane materials and polyethylene terephthalate (PET). We have completed the chemical business platform that combines our trading and manufacturing operations in China. In Oder to strengthen our competitive position in the Chinese market, staring from 2003, we have established sales offices, invested in Polystyrene (PS), PET and recycle PET manufacturing plants throughout china. Furthermore, to enhance our business portfolios, we have capitalized matured businesses, and made new investments into more promising sectors.While strengthening our position in Chinese market, we will seek new business opportunities and enhance our competitive edge by expanding into other markets such as Europe, America and Southeast Asia, and also intro-duce high-value products.
SK Networks trades steel products, produced at home and abroad, to global markets. Our main sup-pliers are Korean steel manufacturers such as Pos-co, Union Steel, Dongbu Steel, and Hyundai Steel, and Chinese manufacturers such as Taiyuan Steel and Baoshan Steel, Anshan Steel, and Shagang Steel and other steel mills around the world.
Our product lines include hot-rolled coil, plate, cold-rolled coil / galvalume, long steel, and special steel such as Stainless steel (STS). We supply products mainly to markets in the Middle East, Europe, America, Australia, and Asia such as China, Japan, Taiwan, India and Southeast Asian countries. While exporting domestic products to overseas markets, we are also focusing on overseas sourcing to en-hance our trading competitiveness.
Since we began our resource development busi-ness in 2005, we have invested in 16 mining proj-ects regarding coal, iron ore, copper and other non-ferrous metals. Currently we have seven operating mines; five coal mines, one iron ore mine and one copper mine.
In 2013 we restructured our business portfolio to focus on coal business. We now concentrate on the coal trading in domestic markets and develop-ing coal mines in Australia. We will ensure stable profitability and growth by strengthening our trad-ing capabilities and carefully managing our invest-ment assets in mining projects.
2120
Chemicals Steel Naturalresources
TRAD
ING
Information&Communication
TechnologyMarketing
2322
No.1Mobile Device
8.5Annual handsets sales
Million
Korea’s number one mobile device distributor /Sales of 8.5 million handsets a year
6.6
INFORM
ATION &
COMM
UN
ICATION TECH
NOLOGy M
ARKETING
Our ICT device distribution business consists of
the wholesale division and SK Networks Service
(SKNS), our subsidiary company. We sell over 8.5
million handsets a year via Korea’s largest distribu-
tion channel for mobile devices. SKNS operates the
network, distributes network system equipment,
and offers mobile games. It also undertakes after-
sales services.
We will develop and strengthen our distribution
system and platform, and expand our presence in
the global market. We will focus on customer con-
venience, in particular through our mobile and on/
off line platforms.
SK Networks offers customers a happy digital life
Sales in 2013 (in trillions of KRW)
Logistics We have distributed ICT devices for
20 years through our advanced logistics system. Other
items we distribute include printers, computer servers,
audio systems and equipment, and auto parts. We also
offer services such as tripartite logistics, warehouse stor-
age, and forwarding. We are aiming to establish a com-
bined logistics system for each item, so that customers
can benefit from a simplified distribution process.
Global Sourcing SK Networks distributes
ICT devices made by mobile phone companies around
the world, and is the exclusive distributor in Korea for
some of those products. In addition, we lease handsets
to corporate clients, and distribute prepaid cards. We will
continue to seek high-tech products to introduce to the
domestic market.
Wholesale With 1,100 exclusive outlets nationwide - the largest dis-
tribution channel and logistics base in Korea - we provide customers with ICT
devices from handset makers at home and abroad. Our partnership with SK
Telecom, Korea’s number one mobile service provider, also helps us to en-
hance our position in the market. We target win-win partnerships with indi-
vidual outlet operators, and support them through a vast array of marketing,
consulting and financial programs.
Wholesale 2524
INFORM
ATION &
COMM
UN
ICATION TECH
NOLOGy M
ARKETING
Energy&Car
2726
No.1730
Gas Station
car Maintenance
Korea’s leading petroleum product distributor / 730 auto maintenance centers nationwide
ENER
Gy &
CAR
SK Network’s Energy & Car Business Division provides petroleum products and services through distribution channels such as gas stations, LPG stations, auto main-tenance centers, and car rental centers.
Our high-quality gasoline is distributed to 3,100 gas sta-tions nationwide. For greater customer convenience, high-class car washing and repair and maintenance cen-ters are located in our gas stations. There are also con-venience stores and even fast food restaurants in some of them.
We offer repair, maintenance and emergency road ser-vices under the brand “Speedmate”. We also sell new cars through our subsidiary “Speed Motors”. Our “Hap-py Auto Membership” provides customers with fuel dis-counts, free car washing and free changes of engine oil. Membership was 1.5 million at the end of 2013.
Based on accumulated capabilities and experiences our Energy & Car Business Division will develop new busi-nesses such as electronic vehicles, and new distribution models. We will continue to seek new challenging op-portunities and business innovation in order to further satisfy customers’ demands.
Korea’s number one petroleum product distributor Top-notch auto repair and maintenance service provider
11.3
Sales in 2013 (in trillions of KRW)
LPG Stations We supply high-quality products
to 67 affiliated LPG stations nationwide. Various market-
ing and customer management programs are offered to
the stations to help them secure and maintain a strong
customer base. In order to increase the competitiveness
of LPG stations, we are striving to link a variety of car-life
content to the stations, and offer more value to customers.
SalesofAsphaltsandFuelforShips As well as general asphalts, we also provide highly durable
asphalts for the domestic market. In addition, we supply lu-
bricant and bunker C oil to national flag carriers and foreign
vessels inbound to Korea.
SK Networks provides gasoline, kerosene, diesel and LPG through some 3,100 gas stations and 67 LPG stations across the country. We also supply asphalt, and fuel for ships.
GasStations SK Networks works closely with
its affiliated gas stations to increase customer satisfac-
tion. We offer the gas stations standardized customer
satisfaction manuals, and regularly evaluate their cus-
tomer service. Open and real-time communication with
gas station operators is enabled and promoted through a
B2B site (www.SK e-market.com). Operators can order
petroleum products in real time, and request marketing
tools via the site. In partnership with the operators, we
offer customers the “Enclean Bonus Card”, which offers
various benefits when they purchase our products.
For greater customer convenience, high-class car wash-
ing under the brand “Bubble i” and repair and mainte-
nance centers are located in our gas stations. There are
also convenience stores and even fast food restaurants
such as McDonalds in some of them. Our share of the
domestic petroleum products market is about 20%.
EnergyMarketing 2928
ENER
Gy &
CAR
After beginning with auto maintenance services, our Speedmate brand has extended its business into emergency road services, new car and auto parts sales, and car rental. It also offers cus-tomers information about efficient auto usage through offline, online and mobile channels. Our “Happy Auto” membership was 1.5 million at the end of 2013.
SpeedmateAutoMaintenance With the best mechan-
ics and high-tech facilities, we lead the auto repair and
maintenance market in Korea. In 2013 we had 730 main-
tenance centers in operation nationwide, solidifying our
position as the number one brand. We focus on nurturing
the best engineers and developing cutting-edge main-
tenance techniques in cooperation with the wider auto
business and academia.
3130
EmergencyroadService(ErS) Since first being launched in 1996, our advanced ERS
has developed comprehensive location-based services,
and cutting-edge emergency management systems.
Given the huge expansion of the mobile environment,
we installed a smart phone-based ERS system in 2011.
A total of 430 ERS networks were in operation nation-
wide in 2013.
Carrental The car rental market in Korea is con-
tinuing to expand, and so SK Networks has responded
by increasing its business through synergy with our
maintenance services and ERS. In 2013 we operated
some 24,000 cars for short- and long-term car rental.
To improve the satisfaction of our long-term corporate
clients, we undertake regular check-ups and repairs of
their business vehicles, and operate a Call Center exclu-
sively for them. We continue to introduce a wide range
of good value long-term car rental packages for individual
customers. In 2013 we began an electric vehicle rental
service in Jeju, to meet demand for more eco-friendly
car rental services.
ENER
Gy &
CAR
Lifestyle
3332
The Walkerhill Duty-free Shop has regis-tered double-digit growth for three con-secutive years (CAGR of 14%)
W Seoul-Walkerhill ranked first in the hotel category of the Korea Pride Index for three consecutive years.
No.1WALKERhILL
14%cAGR
18O’2nd
O’2nd SK Networks’ own brand of ladies wear, is available in 18 countries.
540 450
LIFESTyLE
SK Networks’ fashion business is one of the most
exciting and promising projects that we have un-
dertaken. We have successfully launched our own
brands, and brought well known overseas brands
to the domestic market. Our fashion business has
also moved into the global market, including China,
and has seen positive results already.
We also operate the Sheraton Grande Walkerhill
hotel, the W Seoul-Walkerhill hotel and the Walk-
erhill Duty-free shop in Korea. Walkerhill will con-
tinue to contribute to the development of Korean
hotel industry, and offer more creative service to
customers.
We will help our customers’ success and happiness through top-level products and services.
Fashion Sales in 2013(in billions of KRW)
hotel Sales in 2013(in billions of KRW)
Obzee Obzee is a leading designer brand in Korea,
and expresses luxurious feminine fashion in a chic and
stylish way. In 2013 we launched this brand in major
department stores in Shanghai, and operate 5 shops in
Hangzhou, China.
O’2nd O’2nd is a unique ladies wear brand, based
on the concept of a “Pop Boutique”. Its art, culture, and
fashion-harmonized style appeals to trendsetters. Since
its first launch in China in 2009, O’2nd now has 70 shops
across China, and, beginning with a launch at Barney’s in
New York in 2011, it has been released in 18 countries
around the world, including China, the USA, Canada, the
UK, Japan, Taiwan and Hong Kong.
rouge&lounge Launched in 2013, rouge &
lounge is a contemporary accessory brand that features
unique design, reasonable prices and top quality. We op-
erate 26 stores in Korea. The brand will launch in China
in May 2014, and then expand further internationally, in-
cluding in the USA.
TommyHilfiger With its “Classic American
Cool”, this premium global brand offers a variety of casu-
al fashion, ranging from classics to the very latest styles.
DKNY DKNY expresses the energy and spirit of New
York. It releases modern urban clothing and accessories
every season.
Donna Karan Collection Donna Karan
Collection is a modern system of dressing created to ap-
peal to women’s senses on every level, founded on an
intuitive understanding of a woman’s need and desires.
ClubMonaco Club Monaco is a New York-based
modern urban brand. It features vintage, affordable and
luxury style.
CalvinKleinPlatinum This brand offers
a minimal and refined silhouette with the concept of a
sexy, urban young sensibility. Each item is made from
high-quality materials, and displays a tasteful and re-
strained beauty.
2econdfloor 2econd floor is a ladies wear brand
launched in Korea for the spring season of 2014. It of-
fers designs with a contemporary sensibility and modern
femininity, and its high quality and originality have gained
attention in the market. There are 21 stores in Korea, and
we also plan to launch the brand into the global market,
including in China.
Our fashion business in Korea includes our own brands such as Obzee, O’2nd, rouge & lounge and 2econd floor, and well-known overseas brands such as Tommy Hilfiger and DKNY. We have also successfully launched the O’2nd brand in China, the UK and USA, and plan to expand the global presence of our other brands.
Fashion
3534
LIFESTyLE
SheratonGrandeWalkerhill Located at the foot of Mount Acha, overlooking the Han River in Seoul,
the Sheraton Grande Walkerhill, part of the global Starwood hotel group, has offered the very best in quality hotel services
over half a century. It has 583 guestrooms, 10 restaurants and bars, a duty-free shop, outdoor leisure sports facilities and
a 14-hall convention center including a banqueting hall with a capacity of 1,000. Guests can enjoy seasonal theme festivals
such as the Riverpark outdoor swimming pool, a camping zone and a trail filled with flowers along Acha Mountain.
The hotel operates 9 restaurants at Incheon International airport, as well as the airport transit hotel. There are also branch
restaurants: VIZAVI, WIZWIT, and Faro Grand in central Seoul.
WSeoul-Walkerhill The W Seoul Walkerhill is also part of the Starwood hotel group, and boasts unique
interior designs and the best in service. It offers 252 guestrooms and facilities such as restaurants with both Western
and Eastern interior design, the AWAYⓇ⃞spa and two meeting rooms - the “Great Room” and the “Studio”- with an urban
setting and distinctive interiors. The W Seoul Walkerhill provides guests with an unforgettable experience and memories
to cherish for a lifetime.
WalkerhillDuty-freeShop Under the slogan of “Prestigious Purveyor of Style and Value”, the Walkerhill
Duty-free shop is a unique cultural shopping place providing exclusive shopping experiences with premium quality of ser-
vices. With fascinating environment of Acha Mountain and Han River, the Walkerhill Duty-free shop delivers wide range of
products in total 3 floors: the first and the largest high-end watch & jewelry boutiques on the lower floor, world-renowned
luxury fashion brands on the first floor, and a variety of fashion brands & luxury cosmetic brands on the second floor. After
shopping, Customers can relax with an extraordinary panoramic river view at the lounge. Walkerhill Duty-free shop also
has an online shopping mall (www.skdutyfree.com) and offers exclusive programs and various attractive events.
Starting with the renovation of high-end watch & jewelry boutiques from January, 2015, Walkerhill Duty-free shop plans
to position itself as a ‘landmark of Cultural shopping’ for Korean and overseas visitors through the grand opening of entire
floors on the second half of 2015. Combining distinctive merchandising strategy, customized marketing programs for our
core target, and desirable culture & entertainments from casino and luxurious hotels, Walkerhill Duty-free shop creates
a new paradigm in travel retail industry by reinforcing the brand identity as the ‘Culture-tainment Shopping Destination’.
The Walkerhill Duty-free shop will further strengthen our competitiveness through the recruitment of the top 20 brands
and Walkerhill Duty-free shop exclusive brands to enhance customer values and to increase the revenue.
DutyFree
hotel / Duty-Free
hotel
Hotel3736
LIFESTyLE
SKNetworksService(SKNS) SKNS is becoming
a major player in the telecoms service market. Its business scope
includes after-sales service of SK Telecom subscribers’ handsets.
The company also offers a mobile platform service that embraces
mobile game publishing. In addition, SKNS operates and maintains
the wireless network of SK Telecom and SK Broadband. Based on
its technological expertise and know-how, the company is involved
in the repair and maintenance of the national defense network.
Speed Motors Speed Motors was launched in Octo-
ber 2011 as GM Korea’s official distributor in Choongcheong and
Jeonla provinces in Korea. The company sold 28,000 cars in 2013
through 55 dealer shops. Speed Motors will continue to build its
competitive edge, backed by SK Networks’ auto maintenance, ERS
and car rental services.
Subsidiaries
3938
SKPinx SK Pinx operates top-class leisure facilities in Jeju,
including a golf club, Podo Hotel and Biotopia House. The golf club
has been selected as one of the world’s top 100 golf courses by
Golf Digest of the US and Golf World of England in 2005. The com-
pany will continue to build prestigious housing facilities and offer
opportunities for the best in leisure and recreation.
SUB
SIDIAR
IES
ChinaBusiness
4140
63
5Business Divisions
50Regions
110Business Sites
CH
INA B
USIN
ESS
SK Networks first entered the Chinese market in
1991, and now every business unit of SK Networks
has operations there. In 2009, we established a Chi-
na office to integrate our Chinese operations into
one business. The China office now runs steel and
chemicals-based trading, car rental, real estate de-
velopment and fashion businesses.
In response to China’s age of mass consumption,
we will continue to seek new growth by pursuing
complete localization in China.
Business in china
Sales in 2013 (in billions of KRW)
Logistics We operate a bonded warehouse in
Dandong of China. We will continue to be an important
base for multinational manufacturing and trading.
Chemicals/Steel We focus on trading in-
dustrial materials such as chemicals and steel. We have
also begun materials processing, to meet domestic and
overseas demand.
Carrental We acquired Kumho Rent-a-car (Chi-
na) in 2011, and have made great progress since then.
We are committed to offering the Chinese market the
best in car rental services.
Fashion With the successful launch of the O’2nd
brand, we are aiming to diversify our brand portfolio and
become a fashion leader in China.
real Estate Development We have
built apartment buildings in Dandong, and a terminal
complex in Shenyang. We have also joined in real estate
development projects in the new town of Dandong. Our
aim is to become a leading real estate developer in the
three Northeastern provinces of China.
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CH
INA B
USIN
ESS
ManagementSupportDivisionalGroup
4544
vISION2020
Mid-TermManagementPlan
(4th To-be)
Innovatingourprogramsandpolicies
GLOBALIZATION
MAN
AGEM
ENT SU
PP
OR
T DIvISIO
NAL G
RO
UP
In 2013, Management Support Divisional Group fo-
cused on investment risk and increasing the com-
pany’s financial stability. In 2014, the Group will fur-
ther strengthen its checks and balance functions,
and promote new growth.
Its main role is to set short- and long-term manage-
ment goals, and to devise feasible and effective
strategic plans.
It establishes the optimal business structure, and
helps business units to find new drivers for growth.
To this end, its resource management processes
are continuously optimized and upgraded. The
Group also offers accurate and timely business in-
formation to front-line units, and undertakes financ-
ing and risk management.
In addition, the Group is involved in securing and
nurturing high-caliber personnel, and promotes a
culture of open communication.
Management Support Divisional Group is a strategic management unit to enhance SK Networks’ global competitiveness.
Socialresponsibilities
A.volunteerActivities
companions for visually impaired children We provide visually impaired children with compan-ions and outdoor recreational programs to help and encourage them.
Infant caregivers at temporary care center We share our love with orphaned infants until they are adopted by warmhearted families.
Supporting in making Braille books We support good quality books to be convert into Braille to help the visually impaired people.
clean-up in the community We periodically undertake a thorough clean-up in our community to help to preserve the environment and our cultural assets.
Delivery of lunchboxes In partnership with community welfare centers, we deliver lunchboxes to underserved elderly people in need.
The season of sharing happiness We actively participate in the SK Group’s volunteer ac-tivities. These include fundraising, the Habitat Housing campaign, a charity bazaar, kim-chang(making Kimchi) and help for under-nourished children.
B.ProBonoActivities
Vehicle check-up and repair Our Speedmate engineers help people in special needs by inspecting and repairing the electric wheelchairs and scooters. We also sponsor a competition that encour-ages the repair of assistance devices for the physically challenged people.
help in recipe development Head chefs at the Sheraton Grand Walkerhill Hotel pass on their know-hows of various sauce foods from Ko-rean, Chinese, Japanese and western cuisine to many social enterprises.
C.GlobalActivities
Our global offices undertake community activities at nursing homes, schools for physically challenged stu-dents, and for underserved students.In the case of natu-ral disasters, we all help in recovery work.
4746
DreamPackageProjectThis project, as one of our global volunteer activities, donates school supplies to children in need around the world. Participants include our Korean and overseas staff, as well as other volunteer citizens and social enterprises.
SOC
IAL RESP
ON
SIBILITIES
Growth together with communities
Employees’ voluntary
participation
Volunteerism in relation to our business
Direction
SK Networks works together with its neighbors and local communities around the
world to make dreams come true through volunteer activities of its staff and stake-
holder. SK Networks had 62 volunteer groups in 2013, and every staff member took
part in at least one group. The average volunteering commitment in 2013 was 12 hours.
FairTradeTo foster a strong and fair corporate culture, SK Networks has had in place since 2002
an employee Compliance Program (CP). A CP Director, appointed by the Board of Di-
rectors, and a CP unit take charge of CP, and regularly report compliance operations to
the Board.
01/ Fair trade education programWe offer each business unit education on fair trade to promote the right fair trade mindset. In 2013, some 500 employees from 20 business units participated in this program.
02/ Improving the cP unit We have established a Communication Consultative Group which consists of the CP Director and the heads of those business units most closely related to fair trade activities. Together with the CP unit, the Group regularly inspects staff and management compliance with all our fair trade requirements.
03/ In-house transactionsTo ensure complete transparency in large scaled in-house transactions, the company’s Audit Committee as-sumed responsibility for inspecting in-house transactions in 2012. In 2013, the Committee reviewed a total of 8 items. These items were then reported to management, along with suggestions for appropriate solutions.
4948
FINANCIAL HIGHLIGHTS
2013
In response to the slow-down in the global economy and an unfa-
vorable business environment at home and abroad in 2013, SK Net-
works focused on restructuring its business lines, reducing costs,
and increasing profitability. Thanks to these efforts, the company’s
sales revenue totaled KRW 25.9 trillion, while operating income
was KRW 241 billion in 2013
compliance Program unit- Compliance Program Director- Communication Consultative Group
FAIrTrADE
FAIR TR
ADE / 2013 FIN
ANC
IAL STATEMEN
TS
commitment to compliance - CEO and Management
Implementation Plan - Education, Training, Inspection and Distribution of Guidebook
61th Year: As of December 31, 201360th Year: As of December 31, 2012
(Unit : KRW)
Assets
Ⅰ. current assets
Ⅱ. Non-current assets
Totalassets
ConsolidatedFinancialStatement
SK networks and subsidiaries
61th Year: As of December 31, 201360th Year: As of December 31, 2012
(Unit : KRW)
Trade and other payables
Borrowings and bonds payable
Financial derivatives liabilities
Other financial liabilities
accrued taxes
Allowances
Other current liabilities
Liability directly related to non-current assets as held for sale
2,821,860,963,958
1,470,960,341,708
47,047,844,551
266,635,970,481
10,474,924,468
364,353,689
148,957,181,221
98,276,731,529
Liabilities
Ⅰ. current liabilities 4,864,578,311,605 5,660,559,935,702
Ⅱ. Non-current liabilities 1,449,711,790,379 1,900,138,675,161
6,314,290,101,984 7,560,698,610,863Totalliabilities
Shareholders’equity
Ⅰ. controlling interest 2,569,128,769,526 3,063,871,684,049
Ⅱ. Non-controlling interest (4,044,007,685) 2,502,983,573
Totalshareholders’equity
Totalliabilitiesandshareholders’equity
2,565,084,761,841
8,879,374,863,825
3,066,374,667,622
10,627,073,278,485
5150
3,254,836,713,813
1,813,874,654,507
88,474,836,819
301,465,370,222
42,780,548,091
-
159,127,812,250
-
1,300,188,490,222
11,834,633,243
81,351,389,054
20,182,563,750
15,536,571,134
18,354,798,793
2,263,344,183
1,453,775,990,793
8,803,867,282
184,472,287,578
230,442,251,222
19,873,839,406
616,210,278
2,154,228,602
648,653,775,000
874,412,331,872
1,032,379,971,430
13,682,691,224
648,653,775,000
877,343,245,809
1,660,932,416,900
(123,057,753,660)
2013 FINAN
CIAL STATEM
ENTS
4,464,934,693,825
4,414,440,170,000
8,879,374,863,825
1,306,526,351,273
27,575,572,825
44,999,992
1,491,886,234,005
3,489,885,398
201,752,839,774
98,551,269,859
979,452,190,793
355,655,349,906
47,500,000
143,509,064,752
1,005,000,061
416,577,720,650
-
262,941,252,610
3,333,689,868,563
120,991,367,566
32,340,065,072
51,768,184,533
51,570,146,193
Description End of 61th year (current) End of 60th year (prior)
5,098,454,746,503
5,528,618,531,982
10,627,073,278,485
1,211,942,547,193
50,856,451,261
44,999,992
1,897,130,303,195
28,513,393,822
361,214,654,071
99,394,929,977
1,432,551,313,992
16,806,153,000
22,248,269,121
208,059,860,991
1,050,000,053
1,208,576,449,469
-
211,404,346,010
3,578,846,335,347
161,558,012,376
63,194,936,547
3,894,462,096
69,785,859,972
Long-term financial instruments
Available-for-sale financial assets
Held-to-maturity financial assets
Investments in joint ventures and associates
Financial derivatives
Other financial assets
Tangible assets
Intangible assets
Investments in real estate
Deferred income tax assets
Other non-current assets
Cash and cash equivalents
Short-term financial instruments
Held-to-maturity investments
Trade and other receivables
Financial derivatives
Other financial assets
Other current assets
Inventory
Non-current assets as held for sale
Description End of 61th year (current) End of 60th year (prior)
Borrowings and bonds payable
Financial derivatives liabilities
Other financial liabilities
Deferred income tax liabilities
Defined benefit obligations
Allowances
Other non-current liabilities
Capital stock
Consolidated capital surplus
Consolidated retained earnings
Consolidated other reserves
Ⅰ
5352
Ⅰ. cash flow from operating activities
Net income
Adjustments for non-cash items
Adjustments for working capital
Adjustments for working capital
Interest paid
Dividends received
Corporate taxes
Ⅱ. cash outflow from Investment Activities
Increase (Decrease) in short-term financial instruments
Increase (Decrease) in long-term financial instruments
Increase (Decrease) in financial derivatives
Increase (Decrease) in financial derivatives liabilities
Increase(Decrease) in short-term loans
Increase(Decrease) in long-term loans
Increase (Decrease) in long-term loans
Sales of available-for-sale financial assets
Acquisition of available-for-sale financial assets
Disposal of non-current assets as held for sale
Disposal of investments in associates and subsidiaries
Purchase of investments in associates and subsidiaries
Sales of tangible assets
Acquisitions of tangible assets
Sales of investments in real estate
Acquisition of investments in real estate
Sales of intangible assets
Acquisition of intangible assets
Net increase (decrease) in deposits paid
Cash outflow from acquiring control
Cash inflow from losing control
Other
Ⅲ. cash flow from Financing Activities
Increase (decrease) in short-term borrowings
Repayment of current portion of long-term borrowings
Repayment of current portion of long-term bonds
Long-term borrowings
Borrowings of bonds
Settlement of currency swap
Dividend payments
Sales of treasury stock
Ⅳ. Increase in cash and cash equivalents(losses) (I+II+III)
Ⅴ. underlying cash and cash equivalents
Ⅵ. Difference in cash and cash equivalents by changes in foreign exchange rates
Ⅶ. cash and cash equivalents estimated sales price
Ⅷ. Term-end cash and cash equivalents
61th Year: From January 1 to December 31, 201360th Year: From January 1 to December 31, 2012
(Unit: KRW)
61th Year: From January 1 to December 31, 201360th Year: From January 1 to December 31, 2012
(Unit: KRW)
Ⅰ. Sales
Ⅱ. Sales costs
Ⅲ. Gross profit
Ⅳ. Selling and general administrative expenses
Ⅴ. Operating income
Ⅵ. Other revenue
Ⅶ. Other expenses
Ⅷ. Financial revenue
Ⅸ. Finance costs
Ⅹ. Gains on valuations using equity method (losses)
. Income before income tax expenses (loss)
. Income tax expense (profit)
. Net income (loss) at quarter of the year
Total parent company equity holders
Non-controlling interest
Total
. Other comprehensive profit (loss)
1. Items that can be reclassified to profit (loss)
Capital change using equity method
Negative capital change using equity method
Gains and losses on valuations of available-for-sale financial assets
Gains and losses on overseas operations
Gains and losses on valuation of derivatives
2. Items that will not be reclassified to profit (loss)
Remeasurements of net defined benefit liability
. Reverted total inclusive gains (losses)
Controlling interest
Non-controlling interest
Total
. Gains (losses) per share
Basic and diluted earnings (losses) per share
25,975,361,370,229
24,065,827,304,970
1,909,534,065,259
1,668,710,530,485
240,823,534,774
132,234,136,701
992,161,968,391
375,530,084,450
473,293,267,523
(81,533,282,430)
(798,400,762,419)
206,585,533,290
(567,977,722,088)
(23,837,507,041)
(591,815,229,129)
130,650,572,722
135,851,698,278
(4,911,242,502)
138,441,944,116
13,407,069,613
(11,947,282,342)
861,209,393
(5,201,125,556)
(5,201,125,556)
(437,062,936,752)
(24,101,719,655)
(461,164,656,407)
(2,289)
27,935,503,372,187
25,923,492,760,930
2,012,010,611,257
1,760,450,648,367
251,559,962,890
161,247,098,280
194,824,050,606
438,787,346,980
561,232,180,229
(25,927,173,775)
69,611,003,540
57,666,695,994
48,104,151,736
(36,159,844,190)
11,944,307,546
(177,419,858,037)
(172,568,344,951)
(35,212,454,666)
(89,389,499,147)
(10,203,124,487)
(39,641,922,330)
1,878,655,679
(4,851,513,086)
(4,851,513,086)
(127,606,627,649)
(37,868,922,842)
(165,475,550,491)
194
437,880,674,277
(591,815,229,129)
916,525,135,666
274,823,019,250
28,939,037,103
(104,940,628,983)
107,175,636
(85,757,835,266)
153,580,710,789
23,306,142,200
21,200,000,000
-
(57,188,440,653)
18,669,604,339
(4,932,872,872)
44,999,992
66,415,417,358
(16,721,964,679)
16,806,153,000
228,675,589,066
(48,752,601,243)
37,060,092,077
(150,160,870,562)
1,029,838,603
-
4,092,921,400
(12,764,707,835)
18,862,169,554
-
-
7,939,241,044
(476,231,909,591)
(502,951,658,287)
(43,698,845,337)
(250,000,000,000)
58,872,127,683
298,794,500,000
-
(37,248,033,650)
-
115,229,475,475
1,211,942,547,193
(232,130,718)
(20,413,540,677)
1,306,526,351,273
56,703,660,963
11,944,307,546
369,414,797,785
(183,034,258,107)
36,369,435,786
(135,688,442,204)
7,629,976,970
(49,932,156,813)
80,964,349,191
(10,685,531,311)
-
21,294,063,364
(12,641,530,861)
(16,645,786,452)
(9,815,696,667)
67,499,984
17,561,630,221
(57,048,125,574)
-
93,891,605,267
(26,693,753,013)
116,375,076,681
(140,583,335,029)
-
(359,410,108)
12,757,778,723
(26,698,408,446)
288,252,986
32,507,253,994
39,018,860,486
48,373,904,946
(182,478,803,896)
86,182,708,695
(121,810,358,834)
(146,000,000,000)
35,936,663,020
-
460,106,000
(37,248,031,900)
109,123
(45,213,653,631)
1,257,156,200,824
(402,859,889)
1,211,942,547,193
2013 FINAN
CIAL STATEM
ENTS
ConsolidatedStatementsofComprehensiveIncome
SK networks and subsidiaries
Description End of 61th year (current) End of 60th year (prior)
Ⅸ
ⅨⅠ
ⅩⅢ
ⅩⅣ
ⅩⅤ
ⅩⅥ
ConsolidatedStatementsofCashFlow
SK networks and subsidiaries
Description End of 61th year (current) End of 60th year (prior)
61th Year: From January 1 to December 31, 201360th Year: From January 1 to December 31, 2012
(Unit: KRW)
5554
2012.01.01 Equity at the beginning of period
Change in coverage of consolidation
Retained earnings after appropriations
3,231,225,511,094
48,104,151,736
(35,212,454,666)
(89,389,499,147)
(10,203,124,487)
(37,977,428,606)
1,878,655,679
(4,806,928,158)
(37,248,031,900)
109,123
사사사사사사사사사사사사사사사사
(646,118,462)
(1,853,158,157)
(123,057,753,660)
(123,057,753,660)
(4,911,242,502)
138,441,944,116
13,407,069,613
(11,875,757,296)
861,209,393
817,221,560
13,682,691,224
47,846,097,567
사사사사사사사
(35,212,454,666)
(89,389,499,147)
(10,203,124,487)
(37,977,428,606)
1,878,655,679
1,660,932,416,900
1,660,932,416,900
(567,977,722,088)
(5,008,437,988)
(37,248,033,650)
(18,318,251,744)
1,032,379,971,430
1,654,883,225,222
48,104,151,736
(4,806,928,158)
(37,248,031,900)
877,343,245,809
877,343,245,809
(2,688,554,315)
(242,359,622)
874,412,331,872
3,273,394,676,799
(2,926,646,425)
11,944,307,546
(35,212,454,666)
(89,389,499,147)
(10,203,124,487)
(39,641,922,330)
1,878,655,679
(4,851,513,086)
(37,248,031,900)
109,123
(646,118,462)
(1,853,158,157)
3,066,374,667,622
2,502,983,573
1,711,051,646
(23,837,507,041)
(71,525,046)
(192,687,568)
15,843,676,751
2,565,084,761,841
42,169,165,705
(2,926,646,425)
(36,159,844,190)
(1,664,493,724)
(44,584,928)
3,063,871,684,049
3,063,871,684,049
(567,977,722,088)
(4,911,242,502)
138,441,944,116
13,407,069,613
(11,875,757,296)
861,209,393
(5,008,437,988)
(37,248,033,650)
(2,688,554,315)
(17,743,389,806)
2,569,128,769,526
648,653,775,000
648,653,775,000
648,653,775,000
648,653,775,000
Capital change in equity method
Negative capital change in equity method
Gains (losses) on valuations of available-for-sale financial assets
Gains (losses) on foreign operations translation
Gains (losses) on valuations of derivatives
Remeasurements of defined benefit liability
Total comprehensive income
Transactions with owners reflected in
shareholders’ equity
Total comprehensive income
Transactions with owners reflected in
shareholders’ equity
2013.12.31 Equity at the end of period
2013 FINAN
CIAL STATEM
ENTS
ConsolidatedStatementsofChangesinEquity
SK networks and subsidiaries
Description
2012.12.31 Equity at the end of period
2013.01.01 Equity at the beginning of period
Change in coverage of consolidation
Retained earnings after appropriations
Capital change in equity method
Negative capital change in equity method
Gains (losses) on valuations of available-for-sale financial assets
Gains (losses) on foreign operations translation
Gains (losses) on valuations of derivatives
Remeasurements of defined benefit liability
Net income
Other comprehensive income (loss)
Other comprehensive income (loss)
Net income (loss)
Year-by dividend
Gains on sales of treasury stock
Decrease in capital surplus from business combination
Change in retained earnings using equity method
Capital increases by subsidiaries
M&As among subsidiaries
Other
Year-by dividend
Gains on sales of treasury stock
Decrease in capital surplus from business combination
Change in retained earnings using equity method
Capital increases by subsidiaries
M&As among subsidiaries
Other
879,842,413,305
109,123
(646,118,462)
(1,853,158,157)
648,653,775,000
648,653,775,000
648,653,775,000
SK networks and subsidiaries
Capital stock Consolidated capital surplus Consolidated retained earnings Consolidated other reserves Controlling interest Non-controlling interest Total shareholders’equity
Subsidiaries
SK Networks Service
Mobile phone A/S and networks repairs and maintenance
Speed MotorsCar Sales (Official GM dealer for Chungcheong and Honam regions)
SK pinx
Integrated real estate corporation
Affiliates
SK innovation www.skinnovation.com
SK energy www.skenergy.com
SK global chemical www.skglobalchemical.com
SK lubricants www.sklubricants.com
SK chemicals www.skchemicals.com
SKC www.skc.co.kr
SK E&S www.skens.com
SK gas www.skgas.co.kr
SK Corporation www.sk.co.kr
Energy and Chemicals
Information, Telecommunication & Semiconductor
Trading and Services
SK telecom www.sktelecom.com
SK C&C www.skcc.co.kr
SK broadband www.skbroadband.com
SK telink www.sktelink.com
SK communications http://corp.nate.com
SK telesys www.sktelesys.com
SK planet www.skplanet.co.kr
SK hynix www.skhynix.co.kr
SK E&C www.skec.co.kr
SK shipping www.skshipping.com
SK securities www.priden.com
5756
SUB
SIDIAR
IES / AFFLIATES
12th Floor, MIES Building,135, Seosomun-ro, Jung-gu, Seoul, South Korea
82-70-7805-2004
3th Floor,Donga Life Insurance Bldg,800, Gyeryong-ro, Jung-gu, Daejeon, South Korea
82-42-520-4030
863, Sallongnam-ro, Seogwipo-si, Jeju-do, Korea
82-64-792-5200
5958
GlobalNetwork
The above maps are designed to help investors and customers, with a special focus on the locations of our subsidiaries and offices.
Independent subsidiaries
Joint ventures
Branches and offices
Factories
Vancouver
Santa Rosalia
Rio de Janeiro
Los AngelesNew York
SK networks Business
SeoulDomesticNetworks
changwon
WonjuSuwon
Seoul
cheonan
cheongju
Daejeon
Gumi
Daegu
Busan
Jeonju
Kwangju
CHINANETWOrK
Zhangjiagang
Dalian
Qingdao
Xiamen
Yuanqu
Ningbo
hong Kong
Wuhan
Beijing
Guangzhou
China Business
Shanghai PinghuSuZhou
Taipei
ChinaNetworks
Dandong
Shenyang
21 in China, 20 elsewhereiaries 13 in China, 9 elsewhere
Independent subsidiaries Joint ventures Factories Branches and offices
LondonFrankfurt
RiyadhZeddah
DubaiMumbai
ho chi Minh city
Singapore
Jakarta
Kuala Lumpur
Almaty
Madrid
Amsterdam
Prague
Sydney
TokyoChina Business
SK networks Business
Shenyang
Seoul
Neijiang
Teheran
OverseasLocations
6322
Subsidiaries Branches and offices41
GLO
BAL N
ETWO
RK
60
CorporateHistory
April 1953 : Founded as Sunkyoung Textiles (President & CEO: Chey Jong-Kun)
May 1967 : Launched “Georgette,” the first polyester product manufactured in Korea
November 1973 : Chairman Chey Jong-Hyun took office
January 1976 : Acquired Sunil Textiles and changed company name to Sunkyoung
November 1976 : Designated as general trading company and received “USD 100 Million Export Tower” award
June 1977 : IPO and listing on the Korea stock exchange
December 1980 : Acquired Korea National Oil Corporation
May 1990 : Launched SMART school uniform business
July 1995 : Number of SK gas stations exceeded 3,000
September 1996 : Number of mobile communications outlets exceeded 1,000
January 1998 : Company name changed to SK Global
February 1999 : Acquired Speedmate auto sales and service business
December 1999 : Acquired SK Distribution
July 2000 : Acquired SK Energy Sales
August 2003 : Began selling “Tommy Hilfiger” premium casual brand
October 2003 : Company name changed to SK networks
September 2005 : Established holding company in China
February 2006 : Launched a DKNY brand.
November 2006 : Acquired Shantou PS
April 2007 : Established SK network Service
November 2007 : Acquired Obzee
December 2008 : Annual exports exceeded USD 10 billion
January 2009 : Acquired a car rental business from SK Energy.
January 2009 : Launched an O’2nd fashion business in China.
December 2009 : Acquired Walkerhill
September 2010 : Acquired Jeju Pinx Resort, launched SK pinx
September 2010 : invested in MMK of Brazil, the largest-ever equity stake by a Korean non-petroleum resources developer
October 2010 : Opened Shenyang SK Bus Terminal, becoming the first foreign player to enter the Chinese public facilities business
December 2010 : Acquired SK Energy’s coal business
February 2011 : Opened SK networks Dandong Happiness Academy
March 2011 : Received KRW 200 billion Tower Award for payment of national tax.
March 2011 : Acquired Kumho Rent-a-Car (China)
November 2011 : Became GM dealer for Chungcheong and Honam regions
December 2011 : Achieved KRW 500 billion in sales revenue of fashion business.
December 2011 : Cumulative sales of mobile phones exceeded 100 million.
January 2012 : Introduced Global Business Specialist program
December 2012 : Annual mobile phone retail sales reached KRW 1 trillion
February 2013 : Moon Duk-Kyu took office as president and CEO of SK Networks.
February 2013 : Released a rouge & lounge fashion brand in Korea.
January 2014 : Launched a 2econd floor ladies wear brand in Korea.
February 2014 : Launched an O’2nd fashion business in Taiwan.
1950s-60s
1970s
1980s
1990s
2000s
SK NETWORKS BROchuRE 2014
We create a future for our customer's happiness
